On March 21, 2017 the Economic and Financial Affairs Council (ECOFIN) met. 2 of the topics on the agenda where VAT topics. Like several other Ministries of Finance, also the Hungarian Ministry of Finance issued a short press release with respect to the meeting that took place.

Proposal to authorize non-standard VAT rates for electronic publications

ECOFIN discussed the European Commission’s proposal concerning the reduction of VAT on e-publications. The current directive does not permit the use of a reduced VAT rate for on-line services, such as the electronic sale of publications, although such a rate is allowed for physical publications.

In a press release issued on March 21, 2017 by the Hungarian Ministry of Finance it is stated that the Hungarian Government wants internet access for more and more people at reasonable prices, therefore it will do all it can to make sure that besides Hungary any member state, which considers digitalization to be important, is capable of applying a preferential VAT rate.

With respect to this discussion the Hungarian Ministry of Finance furthermore states that Hungary was prepared to support the European Commission’s proposal concerning the reduction of VAT on e-publications, provided it included a reduced VAT rate also for internet access, as this would well complement efforts to develop digitalization EU-wide. It is furthermore stated that Hungary’s intentions were reported to Commissioner Pierre Moscovici in 2016. According to the press release at the session of the working group that discussed taxation issues, Hungary’s proposals and reasons for reducing the rate of VAT on internet access have been presented in detail.

Allowing Member States to temporary apply a general reverse charge mechanism

A second topic on the agenda was to temporary allow Member States to apply a general reverse charge mechanism to combat VAT fraud. With respect to the discussion that took place regarding this topic the press release as issued by the Hungarian Ministry of Finance states a.o. the following:

“The Ministers also debated the issue of reverse-charge VAT. The Commission’s current proposal would permit member states to request until 30 June 2022 the use of reverse-charge VAT on transactions with a value above EUR 10 000 each, provided certain conditions are met. Hungary believes that the proposal is a useful and adequate tool in the fight against tax fraud”.

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